PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is. 0.25 4 0.4 Rs.4 billion
2 A change in the money supply has a greater effect upon equilibrium income. The more interest sensitive private sector spending is. The less interest sensitive private sector spending is. The smaller the expenditure multiplier is The more interest sensitive money holdings are to the rate of interest.
3 Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when k increases and h increase k increases and h decrease k decrease and h increase k decrease and h decrease
4 Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates. Panel a Panel b Panel c Panel d
5 Consider the five panels of the figure on the previous page in which panel would fiscal policy be the strongest. Panel b Panel c Panel a Panel d
6 Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest. Panel a Panel d Panel b Panel e
7 If a perfectly competitive industry is in long run equilibrium all firms will Have a marginal costs Have identical supply curves Operate at the point where marginal cost just covers all variable costs Have equal fixed costs
8 The largest source of tax revenue for the federal government is. The personal income tax The social security tax The property tax The sales tax
9 Which school of economic thought suggested that one possible cause of inflation was a push from the cost side. New classical economists Monetarists Marxists Keynesians
10 The IMF is an agency charged with providing. Technical assistance to stock market and financial market problems. Loans for post World War II reconstruction Short term credit for international balance of payments deficits Bonds denominated in U.S. dollars as a loan to LDCs
11 Which of the following is not an important variable in growth accounting calculations. Productivity growth Money supply growth Labor growth Capital growth
12 According to classical models, the level of employment is determined primarily by The level of aggregate demand for goods and services Prices and wages Government taxation Government spending
13 An increase in the rate of inflation which is not accompanied by any change in the volume of consumer goods sold will automatically increase the. Revenue from value added tax Level of company profits Level of unemployment Average level of wages
14 Intermediate goods are meant for Direct use by the consumers Further processing The term do not exist None
15 There are ______ methods of measuring GDP Three Four Five None
16 The situation in which the imports are greater than exports is termed as. Trade surplus Trade deficit Budget surplus None
17 The investment demand curve shows the relationship between the levels of. Investment and consumption Consumption and Interest rate Investment and interest rate None
18 Per Capita income is obtained by dividing National income by Total labor Force in the country Unemployed Youth in the country Total population of that country None
19 Disposable income is obtained by subtracting ________ taxes from personal income Indirect taxes Direct taxes Subsidies None
20 You know that all taxes are distortionary under what conditions will this knowledge lead you to appose the imposition of every single tax in the economy. If you live in a 1st best world. If you live in a 2nd best world If the tax rates on some of the items are prohibitively high Either of the above
21 Tax incidence is the Ultimate distribution of a tax's burden Measure of the inpat the tax has on employment and output <div>Behavior of shifting the tax to another party</div> Structure of the tax
22 A 15% VAT is a. Proportional income tax Fixed excise duty Ad valorem indirect tax None of the above
23 According to the Laffer curve as tax rates increase tax revenues. Decrease continuously. Initially decrease and then increase Rise continuously Initially increase and then decrease
24 According to Marshall the basis of consumer surplus is. Law of diminishing marginal utility. Law of equal marginal utility Law of proportions All of the above
25 Identify the three motives of money demand. Accumulative Speculative precautionary Speculative transaction precautionary Precautionary special trisection
26 The rate of which central bank lends to commercial banks is known as reserve rate Discount rate Open market operation None
27 There are _______ major instrument of monetary policy. Three Four Five None
28 The economic logic behind granting central bank's independence from governmental the conduct of monetary policy is. To eliminate seignior age To allow open market operations To enhance the credibility of monetary policy. None of the above
29 Money or paper currency serves at least _______ functions. Three Four Five Seven
30 The intersection of the IS and LM curves captures. The equilibrium of the demand and supply sides of the economy the equivalence of monetary and fiscal policy Joint equilibrium in the goods and money markets All of the above
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